Executive Summary

Q2 2025 EPS was $1.38, up 10% YoY, with net interest margin expanding to 6.03% and efficiency ratio improving to 47.6% as deposits grew to $1.78B .
Total revenue reached $35.8M (net interest income $29.3M + noninterest income $6.6M), +17% YoY, driven by low-cost core deposits and higher-yield law firm loans .
Consensus EPS matched at $1.38*, while revenue beat S&P Global consensus ($32.3M* actual vs $28.3M* estimate; +$4.0M*), a positive surprise; three covering estimates on both EPS and revenue* [GetEstimates].
Credit costs rose (provision $3.5M; isolated $3.3M charge-off on a merchant loan placed on nonaccrual at $0.736M), but NPLs remained low (0.58% of loans) with ACL coverage at 222% .
Catalysts: continued national law-firm lending growth, branch opening in Los Angeles “this summer,” stable fee income from payments, and dividend maintained at $0.175 per share .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded sequentially to 6.03% (+7 bps), enabled by deploying low-cost deposits into higher-yield law firm loans; revenue grew 17% YoY to $35.8M, underscoring asset-sensitive model .
Deposit growth remained strong (+$94.2M linked; +20% YoY) at a 0.98% cost-of-funds; off-balance sweeps at $373.1M with 93.7% available for liquidity, supporting robust funding flexibility .
Management reaffirmed strategic investment in tech and marketing: “Esquire continues to generate significant capital… industry leading growth and performance metrics… near term opening of our Los Angeles private client office” — Andrew C. Sagliocca, CEO .

What Went Wrong

Provision for credit losses increased to $3.5M (+$2.5M YoY) driven by a $3.3M charge-off on a previously criticized merchant-related commercial loan now on nonaccrual at $0.736M .
Payment processing fees declined YoY (-$0.215M to $5.1M) despite higher volume (+9.2% to $10.1B), reflecting risk profile/composition changes in merchants .
ROA and ROE ticked down YoY (2.37% vs 2.58%; 18.74% vs 20.16%) as credit costs and opex rose; ACL-to-loans decreased YoY to 1.30% (from 1.47%), though coverage of NPLs remained strong (222%) .

Financial Results

Income and EPS

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$24.322	$27.609	$29.254
Noninterest Income ($USD Millions)	$6.275	$6.151	$6.577
Provision for Credit Losses ($USD Millions)	$1.000	$1.500	$3.525
Revenue ($USD Millions)	$30.597	$33.760	$35.831
Diluted EPS ($)	$1.25	$1.33	$1.38

Note: Revenue calculated as Net Interest Income + Noninterest Income from reported statements .

Margins and Efficiency

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Margin %	6.19%	5.96%	6.03%
Efficiency Ratio %	49.8%	49.6%	47.6%
Return on Average Assets %	2.58%	2.39%	2.37%
Return on Average Equity %	20.16%	19.13%	18.74%

Segment/Lending Composition (June 30, 2025)

Category	Amount ($USD Thousands)	Mix %
Litigation-related Commercial	$918,424	61.5%
Commercial – Other	$89,403	6.0%
Multifamily	$366,439	24.5%
Commercial Real Estate	$91,166	6.1%
1–4 Family	$10,093	0.7%
Consumer	$18,584	1.2%
Total Loans HFI	$1,494,109	100.0%

KPIs (Deposits, Liquidity, Payments)

KPI	Q1 2025	Q2 2025
Total Deposits (End of Period, $USD Millions)	$1,688.120	$1,782.328
Cost of Deposits (incl. DDA) %	0.94%	0.98%
Off-balance Sweep Funds ($USD Millions)	$468.8; 94.5% available	$373.1; 93.7% available
Payment Processing Volume ($USD Billions)	$9.3	$10.1
Transactions (Millions)	140.4	152.9
Payment Processing Fee Income ($USD Millions)	$4.912	$5.107

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per common share	Q3 2025 (payable Sep 2, record Aug 15)	$0.175 (Q1 paid; policy increased Jan 2025)	$0.175 declared	Maintained
Los Angeles private banking branch	Summer 2025	Scheduled to open in summer 2025	“Near term opening… this summer”	Maintained (timing affirmed)
2025 loan growth narrative	2025	“Anticipate 2025 loan growth commensurate to prior years”	No quantitative update in Q2 PR/8-K	Maintained (qualitative)

Earnings Call Themes & Trends

Transcript not available via our document catalog; we reviewed prepared remarks and investor materials for thematic continuity.

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Advanced ABM/CRM; tech-enabled risk management; payment processing scalability	Continued investment in tech and tailored digital marketing; “thought leadership content”; AI for sales/marketing (not underwriting)	Consistent/expanding
Deposit franchise & liquidity	Escrow/IOLTA-driven growth; sweeps $554M at YE; liquidity ~64% of deposits	Deposits +20% YoY; sweeps $373M; liquidity ~$1.04B (~58% of deposits)	Stable; liquidity ample
Law-firm/commercial lending	Litigation loans +$223M in 2024; variable-rate anchored; rate floors	Litigation-related loans $918M; variable-rate with floors; strong pipeline	Expanding
Credit/asset quality	NPLs 0.78% at YE; ACL 1.50%; 2025 Q1 nonaccrual multifamily $8.0M (restructuring)	Isolated merchant loan charge-off $3.3M; NPLs 0.58%; ACL-to-loans 1.30%	Mixed (isolated loss; metrics still solid)
Regional trends/branch footprint	National BDO coverage; LA branch plan	LA branch near-term opening	Executing
Regulatory/capital	CET1 14.67% YE; strong capital	CET1 14.89%; equity/assets 12.79%	Strengthening

Management Commentary

“Despite our elevated charge-offs and provisioning on a previously criticized and isolated commercial loan to one of our merchant clients, Esquire continues to generate significant capital from earnings as well as industry leading growth and performance metrics in the current quarter.” — Andrew C. Sagliocca, CEO .
“These recognitions are a testament to the leadership team’s innovation, execution and delivery of customized solutions to complex, fragmented and underserved national markets while providing shareholders with industry leading returns.” — Tony Coelho, Chairman .

Q&A Highlights

An earnings call transcript for Q2 2025 was not available in our catalog. We reviewed the 8-K, press release, investor presentation, and 10-Q for disclosures; no Q&A-specific clarifications beyond prepared commentary were found .

Estimates Context

Metric	Consensus (Q2 2025)	Actual (Q2 2025)	Surprise
EPS (Primary, $)	1.38*	1.38	Inline*
Revenue ($USD Millions)	28.26*	32.31*	+$4.05M* (+14.3%*)

EPS and revenue consensus and S&P Global “revenue” actual values retrieved from S&P Global*. Company-reported total revenue (NII + noninterest income) was $35.8M .
Coverage depth: Primary EPS and Revenue had 3 estimates each in Q2 2025* [GetEstimates].

Key Takeaways for Investors

Sequential NIM expansion and strong deposit growth underpin revenue momentum; asset-sensitive model continues to perform with variable-rate commercial loans and embedded floors .
Credit event appears isolated; NPLs/NPA remain low and coverage solid, but elevated provisioning warrants monitoring as merchant and multifamily/CRE portfolios evolve .
Payments vertical remains strategic: higher volume and transactions with stable fee income (~17–18% of revenue), though risk composition changes can pressure fee levels .
Capital is robust (CET1 14.89%, equity/assets 12.79%), supporting growth, branch expansion (Los Angeles), and dividend continuity at $0.175 per share .
Near-term stock drivers: evidence of continued loan/deposit growth, sustained NIM at/above 6%, clean credit, and execution on national litigation platform/BDO strategy; watch ASP fees/sweeps and any changes in short-term rates impacting cash yields .
Estimate revisions likely biased modestly upward on revenue given beat vs consensus*, with EPS in line; ongoing opex investments and provisioning may cap EPS upside absent stronger spread or fee gains* [GetEstimates] .

Values with asterisk (*) retrieved from S&P Global.

Esquire Financial Holdings, Inc. (ESQ)·Q2 2025 Earnings Summary